28 de julio de 2016 / 6:29 / en un año

UPDATE 2-Carrefour sees improved French margin within two years

* H1 recurring operating profit up 5.3 pct at constant FX

* H1 operating margin in France unchanged at 1.8 pct

* CEO pledges 0.5 pct margin improvement in 2 years

* Open to local partners in loss-making China unit

* May launch property, Brazil flotations next year (Recasts after analyst meeting)

By Pascale Denis and Tim Hepher

PARIS, July 28 (Reuters) - Retail giant Carrefour pledged on Thursday to boost operating margins in its cut-throat domestic market, after posting higher profits from Brazil and southern Europe, and signalled it is open to investors in its loss-making China arm.

The world’s second-largest retailer after Wal-Mart said first-half recurring operating profit rose 5.3 percent to 706 million euros ($785 million) at constant exchange rates, beating the average estimate of 685 million in a Thomson Reuters poll.

Half-year operating profit in France fell 3 percent to 312 million euros, also coming in ahead of market forecasts of 303 million but with margins stable at 1.8 percent.

Like smaller peer Casino, Carrefour’s setbacks in France have ranged from bad weather to strikes that hit sales at hypermarkets while the integration of the loss-making Dia discount stores still weighs on profitability.

In a rare specific forecast on profits, the traditionally cautious chief executive Georges Plassat sought to reassure investors over its core market, saying the operating margin in France would grow by 0.5 percent within two years.

But after rising as much as 2 percent on the better-than-expected earnings, shares in Carrefour fell more than 4 percent, as analysts repeatedly probed for details on financial performance and key markets.

Bernstein analyst Thomas Wharram said questions remained over cashflow, declining market share in France and operations in China, where slowing consumption has hurt sales.

Pressed to comment on cash generation after a first-half negative free cashflow of 2.26 billion euros, Plassat said it was not satisfactory but was “making progress”.

Carrefour, which makes 73 percent of its sales in Europe, is pursuing a global revival by focusing on price and cost cuts, and expansion into smaller convenience stores, while also renovating its core hypermarket network.

It confirmed plans to invest 2.5 billion-2.6 billion euros in renovating and expanding stores.


In China, which represents about 5 percent of group sales, Carrefour has already set out plans to expand in e-commerce and convenience stores and to open logistics centres.

It could also involve local players in consolidation of its Chinese assets, echoing a formula used in Brazil, Plassat said.

Asked about Carrefour’s losses in the world’s second-largest economy, Finance Director Pierre-Jean Sivignon declined to give details but said he expected the trend in China to bottom out in the second half of 2016.

“We see an improved trend in sales in the first half compared to the trend of 2015 and we ... are starting to approach the low point. Our plans are beginning to have an effect.”

Sivignon said average analyst forecasts for group 2016 earnings before interest and tax (EBIT) of around 2.47 billion euros were “reasonable” at this stage, implying a near 1 percent rise from last year’s 2.45 billion euros. But he cautioned this was subject to swings in Brazil’s currency, the real.

First-half operating profit rose 26 percent in Europe, excluding France, led by continued recovery in Spain.

Carrefour also posted 12.3 percent higher profits in Latin America led by a better-than-expected performance in Brazil, where it has coped better than some with economic crisis because its main business of selling food is relatively recession-proof.

Plassat said Carrefour was sticking to plans for a possible flotation of its Brazil unit, which includes Brazil’s largest cash-and-carry store operator.

“We maintain the idea of an IPO (in Brazil) which could happen during 2017,” he said.

He also gave keenly awaited details on the timing of a possible flotation of Carrefour’s shopping mall property unit Carmila, saying it could happen next year.

Analysts say floating Carmila, one of Europe’s five largest commercial property firms, would allow Carrefour to get extra cash to fund its expansion and release value in its portfolio. ($1 = 0.9007 euros) (Reporting by Dominique Vidalon, Pascale Denis, Tim Hepher, Editing by Victoria Bryan and Andrew Callus)

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